Policy Documents

Research & Commentary: Chicago Municipal Wi-Fi

October 12, 2012

The City of Chicago recently unveiled plans to create a municipal wi-fi system allowing free access to high-speed wireless Internet services. Initially, the system would serve only certain areas of the city, including downtown and the Loop. Eventually, it would be expanded to bring wireless access to underserved areas of the city. 

The Chicago Broadband Challenge is not the city’s first attempt to establish citywide municipal wi-fi. In 2007, Chicago was forced to abandon a more-ambitious plan when its private partner pulled out. Supporters of the new initiative argue its reduced scope will increase the chance of success. 

The new wi-fi system would be built around existing infrastructure, with traffic lights and street lights being utilized as “smart poles.” The areas targeted for initial service include city parks and 15 major commercial corridors. The plan is slim on details, however, and suffers from many of the problems that have plagued other municipal wi-fi systems. Those in San Francisco, Boston, Houston, and Seattle, for example, have struggled to remain viable after suffering large cost overruns. 

According to Wi-Fi Net News, many new municipal wi-fi programs have underestimated the implementation costs. Outdoor wi-fi systems are hindered by the need for a large number of radio transmitters to create a strong signal—a single transmitter has a range of only 100 to 200 feet. Cities building the new networks found they required between 20 percent and 100 percent more access points than were budgeted for. 

Subscribership has been a recurring problem as well. According to BusinessWeek, most municipal wi-fi programs have targeted a subscribership of 10 to 25 percent of an area’s population, but typically only about 1 or 2 percent of the population signed up. 

A common criticism of municipal wi-fi is that it duplicates a service that’s already readily available from the private market. Reliable, inexpensive wi-fi can be found in many areas across Chicago, in many cases providing better speeds than a public wi-fi system would offer. 

Instead of spending millions of taxpayer dollars on a municipal wi-fi system, Chicago should focus on creating a vibrant economy that encourages telecom companies to provide these services privately. That means implementing competitive tax rates and business regulations. 

The following articles examine municipal wi-fi and broadband services from multiple perspectives.


Ten Principles of Telecom Policy
http://heartland.org/policy-documents/ten-principles-telecom-policy
In this Heartland Institute Legislative Principles booklet, Hance Haney and George Gilder examine the results of telecom reforms in Indiana, the advances made by other innovation leaders in the telecom market, and how other states can follow their lead to reap the rewards of new investment in telecommunications services. 

City Plans Free Wi-Fi in all Parks, Public Spaces
http://articles.chicagotribune.com/2012-09-24/news/chi-city-plans-for-free-wifi-in-parks-public-spaces-20120924_1_wi-fi-internet-service-broadband-service
Ameet Sachdev of the Chicago Tribune examines Chicago Mayor Rahm Emanuel’s Chicago Broadband Challenge and the goal of creating a high-speed municipal wi-fi system centered in downtown Chicago and aimed at making Chicago “one of the most connected cities in the world.” 

Municipal Broadband: Optimistic Plan, Disappointing Reality
http://heartland.org/policy-documents/no-108-municipal-broadband-optimistic-plan-disappointing-reality
Telecom policy expert Steven Titch compares the financial performance of a municipal fiber-to-the-home system in Bristol, Virginia with projections made by the same consultant for a similar system proposed in Lafayette, Louisiana. Titch found the Bristol system is losing money because its operating budget is growing at an unexpected rate. He also found the proposed Lafayette system failed to reflect these higher real-world expenses, and consequently budgets too little. 

City Unveils Plan for Free Wi-Fi, Wider Super-Fast Internet
http://www.chicagobusiness.com/article/20120924/BLOGS02/120929936/city-unveils-plan-for-free-wi-fi-wider-super-fast-internet
Crain’s Chicago Business takes an in-depth look at Chicago’s muni wi-fi plan and the areas of the city the program is intended to help develop to attract new tech development. 

Municipal Wi-Fi a Proven Failure
http://www.theamericanconsumer.org/2011/05/20/municipal-wi-fi-a-proven-failure/
Zack Christenson of the American Consumer Institute examines municipal broadband programs nationwide, argues against their implementation, and recommends legislation that restricts their creation. “Government-owned broadband networks almost always operate at a loss, see more service interruptions, and generally have fewer satisfied customers than their private counterparts,” he writes. 

A Postmortem Look at Citywide Wi-Fi
http://news.heartland.org/sites/default/files/city_wi-fi.pdf
Eric Fraser writes in the Journal of Internet Law about the many problems facing municipal wi-fi. Fraser argues the projects are destined for failure and municipalities should instead concentrate on small, focused networks. 

Research & Commentary: State & Local Broadband Initiative Failures
http://heartland.org/policy-documents/state-local-broadband-initiative-failures
Since the start of this century, municipalities across the country have proposed and implemented plans to provide their citizens with high-speed Internet access. As of 2007, 52 municipal broadband systems had cost taxpayers a combined $840 million. Cities such as Philadelphia and Provo, Utah—expecting low costs and a reliable revenue stream—have found themselves experiencing ever-increasing costs and limited demand. 

The Viability of Municipal Wi-Fi Networks
http://heartland.org/policy-documents/viability-municipal-wi-fi-networks
Braden Cox of the Competitive Enterprise Institute examines municipal wi-fi and contends it does not possess the characteristics of a public utility that warrant government involvement. “Municipalities should focus on ways to make it easier for private companies to provide service. State legislatures should ensure that they make right-of-way access available on terms that are fair, administratively efficient, nondiscriminatory, and pro-competitive,” he writes. 

Municipal Broadband’s Record of Failure: A Profile in Market Intrusion
http://heartland.org/policy-documents/municipal-broadbands-record-failure
Writing for Americans for Prosperity, James Valvo concludes that before billions of taxpayer dollars are spent on municipal broadband projects under the guise of economic stimulus, we should consider the results of recent projects that already have been undertaken. Almost without exception, he observes, the results have been overwhelmingly negative. 

Not in the Public Interest: The Myth of Municipal Wi-Fi Networks
http://heartland.org/policy-documents/not-public-interest-myth-municipal-wi-fi-networks
Six policy experts examining the practicality and impact of muni wi-fi found that although establishment of municipal broadband is typically framed in terms of best intentions, it doesn’t work. Proponents of municipal broadband ventures claim a high-speed network will help energize decrepit downtown areas, break poverty cycles, increase tourism, and earn a city a reputation as tech-friendly. Such promises are rarely met. 

A State Legislator’s Guide to Telecom Policy
http://heartland.org/policy-documents/state-legislators-guide-telecom-policy
Regulation is not keeping up with technological change in the telecom industry, this report notes. Even the most recent federal law affecting the industry, the Telecommunications Act of 1996, failed to anticipate the widespread adoption of wireless telephone and new technologies such as instant messaging and voice over Internet protocol (VoIP), let alone their substitution for traditional phone service. Never has there been a clearer example of the failure of law to keep pace with technology. Now is not the time for governments to substitute market-based competition for government-managed competition, the authors conclude. 

Minneapolis Wi-Fi Network Is Foundering
http://news.heartland.org/newspaper-article/2009/05/01/minneapolis-wi-fi-network-foundering
Minneapolis’s citywide wi-fi network is not exactly “citywide,” and a few areas are taking much longer than promised to bring online, the Heartlander digital magazine reports. The problems are typical of municipal wi-fi networks, which have failed in scores of cities around the country. 

NYC Presses Ahead with ‘Free’ Wi-Fi Despite Previous Failures
http://news.heartland.org/newspaper-article/2009/08/01/nyc-presses-ahead-free-wi-fi-despite-previous-failures
The Heartlander digital magazine reports that despite recently having to close down eight free wi-fi spots in New York City parks because none was profitable, the city’s Department of Information Technology and Telecommunications aimed for another go. Experts say it doesn’t make sense for municipal authorities to spend limited public dollars on an investment likely to become outdated rapidly.

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit The Heartlander’s Tech News Web site at http://news.heartland.org/tech, The Heartland Institute’s Web site at www.heartland.org, and PolicyBot, Heartland’s free online research database, at www.policybot.org

If you have any questions about this issue or The Heartland Institute, contact Heartland Institute Senior Policy Analyst Matthew Glans at 312/377-4000 or mglans@heartland.org.